The process of being separated from your company is often a surprising, confusing, and emotionally trying. You walk into a routine meeting with a supervisor only to find that a Human Resources representative is also present. Your supervisor hands over a lengthy document containing complex legalese that may not make sense, along with a packet of information about something called COBRA. Despite loyalty and years of hard work, the company has decided to “downsize” or “go in a different direction,” and the employee is asked to review and sign the severance agreement.
The document is frequently called a severance agreement, but sometimes it’s known as a separation or termination agreement, or even the verbose “separation agreement general release and covenant not to sue.”
But what do these things actually mean? A severance agreement is an agreement in which you settle any potential future claims you have against the company up front. In other words, a severance agreement is like a sales contract. You, as the employee being separated, are being offered certain things – usually money, a positive reference, and sometimes confidentiality regarding your separation. In exchange, the the company asks you to “sell” them a series of releases from future legal action and promises about how you’re going to behave going forward. This doesn’t necessarily mean that they believe you may have a claim against them; rather, they wish to stave off the expense of litigation of any claims you may bring while feeling singled out and possibly even discriminated against by being separated.
Virginia Employment Law Blog
